Navy ERP: Where We've Been – Where We're Going

1. Navy ERP:  Where We've Been – Where We're Going Ms Beverly Veit Office of the Assistant Secretary of the Navy (Financial Management and Comptroller), Office of Financial Operations, Systems Team Lead PDI June 2010

2. What is ERP?

3. Navy ERP Strategy • A two phase deployment (by functionality) resulting in one integrated solution • Financial and Acquisition (1.0) • Designed to give an Echelon II or III command a full suite of tools to perform their financial & acquisition functions • Functionality grouped into four categories: • Financial Management: General Fund & Navy Working Capital Fund • Procurement • Work Force Management • Program/Project Management • Wholesale and Retail Supply (1.1) • Designed to support the Navy’s Single Supply Solution. Program of record for repairables and consumables • NAVICP will be the single Inventory Manager for NWCF, setting allowances and aligning budgets with dollars • Functionality falls into five end-to-end supply chain management processes: • Planning • Allowancing • Procurement • Repair of Repairables • Order Fulfillment • Potential Future Capabilities:Financial Extension, Maintenance, Reporting, Contracting, Material Equipment Valuation, Foreign Military Sales (FMS), Manufacturing Planning & Control, Material Tracking PARTNESHIP 3

4. Program of Record – Deployments 4 4 Navy FMC

5. Program Functionality 5

6. Interfaces 6

7. Daily Life in Navy ERP • The ten most utilized Navy ERP transaction codes (grouped by business process) with weekly access/usage ranking • A transaction code is a command that tells the system location of a task. Each function in SAP has a transaction code associated with it, which provides a shortcut to a specific function in SAP. • One Touch Support (OTS) is a web-based system that provides customer on-line requisitioning, technical screening, asset visibility, shipment status, requisition status information, and support request management • At the time of gathering (April 2010) Navy ERP had ~34,000 users

8. Program Updates • SPAWAR (Oct ‘09) • Operating at Full Operational Tempo (FOT) since 16 Dec 09 • Reported FY10 1st and 2nd quarter financial statements out of Navy ERP • Converted data subjected to a financial validation by a combined DFAS/FMO team • See next slide for details • Steady improvement on the Post FOT Business Performance and Health metrics presented to the Navy ERP Senior Integration (NESIB) Board monthly • 16 of 20 metrics are above threshold • Factors affecting the remaining 4 metrics: • Manual Processing • On-going data conversion and catch-up issues • Business Process Changes • User Education 8

9. FMO/DFAS Validation/Reconciliation Effort • The FMO/DFAS Conversion Validation Team analyzed data from 4 Legacy systems used by 6 SPAWAR activities: • Standard Accounting and Reporting System Headquarters Claimant Module (STARS HCM) (used by SPAWAR HQ) • Standard Accounting and Reporting System Field Level (STARS FL) (used by GF field sites) • Defense Industrial Financial Management System (DIFMS) (used by SSC LANT) • Cabrillo (used by SSC PAC) • On 31 Dec 09, the FMO/DFAS validation team completed the review of 20,195 General Ledger (G/L) accounts, across 568 Trial balances, for 14 appropriations, for 6 SPAWAR Business Areas. • Overall, 99% of the G/L accounts tied out to legacy systems or the variances were reconciled/explained. • Initially, 75% (15,244) of the G/L balances were consistent between the legacy systems and Navy ERP. • Of the remaining 4,951 G/L accounts containing variances, 24% (4,819) of the G/L accounts were reconciled and explained. • 1% (132) of the G/L accounts either needed corrective actions post Full Operational Tempo (FOT) or were deemed immaterial based on the materiality threshold. • Since this review all but 4 corrective actions have been completed. 9

10. Program Updates (cont’d) • Single Supply Solution Implementation (Mar ‘10) • Material Group 1 in stabilization period. Anticipating achievement of FOT May 2010. • Phased Deployment (see next slide for details) • Over 54 million data objects loaded and converted with 100% accuracy • Data converted for each material group is being validated financially by a combined FMO/DFAS team. • Replaces many legacy AIS (UICP, U2, R-Supply, Ashore) • Does NOT replace afloat logistic systems. NTCSS Suite (R-Supply Force/Unit, NALCOMIS, OMMS-NG, MFOM) to remain in place. • Financial Compliance Assessment performed by FMO/DFAS team which involved mapping test cases to DoD Blue Book Requirements and reviewing/analyzing collected evidence • Of the 500 selected requirements, 31 were deemed out of scope, 451 (96.2%) were deemed compliant, 9 were viewed as partially compliant and 9 were rated as non-compliant • Items that were partially or non-compliant related to IUID and serial number tracking requirements (and are not expected to be fully compliant until 2014/2015) • Defect Resolution/Regression a continual process • FMO/DFAS will continue to provide validation support throughout the defect resolution (testing) efforts 10

11. Navy ERP 1.1 and NAVICP Phased Deployment 2010 2010 2011 March FEBRUARY 2011 – JUNE 2012 Regional Rollout Fleet Industrial Supply Centers 6 mos 6 mos Material Group 2 NAVICP 40% Material Group 3 NAVICP 40% NAVICP Mechanicsburg Communications/Surveillance Air Traffic Control GPETE/RADIAC Fire Control Integrated Self Defense FMS Support NAVICP Philadelphia SH60 – Seahawk C130 – Hercules TA4J/T2C – Goshawk/Buckeye AV8B – Harrier II F/A18 – Hornet P3 – Orion AH1/UH1 FMS Support NAVICP Mechanicsburg Nuclear Propulsion Strategic Weapons Systems Carrier Planned Equipment Replacement Program End Items NAVICP Philadelphia EA6 - Prowler Aviation Support Equipment V22 - Osprey CH46 – Sea Knight Engines Kits Material Group 1 NAVICP 20% NAVICP Mechanicsburg SS/L1/DSSP HM&E – Ships Propulsion HMI&E – Deck & Auxiliary NAVICP Philadelphia SH3/CH53 – Sea King/Sea Stallion Common Avionics E2/C2 – Hawkeye/Greyhound

12. Planning Phase • Analysis Phase • Readiness & Transition • Final Prep • Go-Live Phase Program Updates (cont’d) • NAVSEA • General Fund “Go Live” 1-Oct-10. On track and in the Command Readiness phase of deployment. • Cutover Plan and production load schedule on track • Primarily Master Data being converted in conjunction with Go Live. Full transactional data conversion will take place at a later date (TBD) • Conversion processes being tested during mocks • Mock 4 file load success rate > 95% • Business Validation plans and Business Transition Planning complete • 6 ECPS Identified • Working Capital Fund deployment planned 1-Oct-11. On track and in the Planning phase of deployment • Business Process workshops complete (working groups scheduled monthly) • Full Master and Transaction Data Conversion will be executed in conjunction with Go -Live • Mock 1 Conversion in process and on schedule 12

13. Financial Extension • What is the Financial Extension? • The Financial Extension intends to deploy Navy ERP to 11 additional commands (currently excludes BUMED, MSC, and Marine Corp) adding ~78,000 users resulting in the execution of approximately 100% of the Navy’s TOA in Navy ERP and the retirement of 17 legacy systems • It will enable business transactions to be executed between commands using standardized processes in a real time environment, with a robust audit trail, resulting in more efficient processing of invoices and payments • What is the strategy? • Establish a proper Governance structure to drive the business transformation by leveraging enterprise tools and business understandings. • Establish a forum for Financial Extension organizations to address concerns and/or requirements • Write the book of standard financial management practices under Navy ERP • FMO will provide guidance and ensure compliance with standard templates • Way Ahead • Implement an understood environment in shortest possible time • Standardize a set of implementation procedures and business processes for the Enterprise using the Navy ERP system • Test processes for auditability on an ongoing basis 13

14. Navy ERP Enterprise End to End Standard Business Processes Budget to Report Hire to Retire Order to Cash Budget to Report Hire to Retire Order to Cash Budget to Report Hire to Retire Order to Cash Procure to Pay Acquire to Retire Procure to Pay Acquire to Retire Procure to Pay Acquire to Retire Manage Customers • Perform Planning • Manage Organization • • Accept Orders Perform Program Development • Acquire Human Resources • Prioritization of Orders • Perform Budget Planning & • Develop Human Resources • Fulfill Orders • Formulation Assign Human Resources • Concept to Product • Execute Requisition • Perform Distribution • Distribute Budget • Maintain Human Resources • Procure to Pay • Source Goods & Services • Manage Receivables • • Manage Budget Separate or Retire Human Resources • Placement into Service • Manage Contract • • Incorporate ‘Exception’ • processes and identify • internal controls within • existing documentation Test and validate standard processes are being used Conduct Continuous Process Improvement efforts for existing documentation Manage Cash Collection • Perform Reporting • • Manage Asset Execute Purchase • Dispose of Asset • Perform Receipt, Acceptance & Return • Process Invoice & Match • Execute Disbursement (Entitlement) • Environmental Environmental Environmental Concept to Service Request Service to Cost Proposal to Concept to Service Request Service to Cost Proposal to Concept to Service Request Service to Cost Proposal to Liability Liability Liability Product (R&D) to Resolution Satisfaction Management Reward (Grants) Product (R&D) to Resolution Satisfaction Management Reward (Grants) Product (R&D) to Resolution Satisfaction Management Reward (Grants) Identify Sites/Assets with Environmental • Recognize Problem • Establish Cost Accounting Procedures • Identify Requirements • Identify Requirement • Identification & Prioritization • Liability Develop Cost Methodology • Define Capability • Establish Service Capability • Fund Requirement • Execution & Review of Grant Application • Develop EL Cost Estimates • Perform Cost Assignment • Develop Product Concept • Provide Service • Source Service • Review & Award of Application • Perform Environmental Cleanup, • Perform Period End Close • Initiate Planning & Obtain Commitment • Measure Customer Satisfaction & • Schedule Service • • Execute Grant Closure, or Disposal Action Develop Reports • Initiate Product Development • Improve • Diagnosis Perform Management & Administration • Report Environmental Liabilities • Introduce Product • Final Requirement • Perform Service • Plan to Stock - Inventory Mgmt Close & Post Record • Plan to Stock • Create Bill Return to Inventory or Use • • Create Inventory Plan • Determine Source • Receive and Accept • Receive, Accept and Market to Prospect to Market to Market to Prospect to Deployment to Deployment to Warehouse Inventory Deployment to Prospect Order Prospect Order • Distribute and Pre - Position Inventory Prospect Order Retrograde/ Retrograde/ Retrograde/ • Perform Inventory Management Redeployment Redeployment Redeployment • Dispose of Inventory • Forecast Sales Establish Marketing Plan • • Generate Leads Target Audiences • • Planning • Negotiate Order Plan & Define Marketing • Organization Notification • • Manage Accounts Campaigns Deployment Preparation • • Service & Support Customer Execute Marketing Campaigns • • Movement Measure & Evaluates Marketing • • Reception Campaign Performance • Theater Support Retrograde/Redeployment • • Reset • Navy ERP Enterprise Standard E2E Business Process Development (FMO/DCMO) as of June 09 • Internal Entitlement Processes • Electronic Invoice Processing (completed) • Manual Invoice Processing (completed) • Purchase Card Process (in process) • F110 Process • Create Purchase Request/Purchase Order • MILSTRIP Process • Direct Cite Process • Preponderance of Funds Process • Reimbursable Funding Process The Financial Management Office, ERP Standards Team works with the Command Business Offices, Navy ERP Program Office, and other interface partners to prepare the end to end business process documentation. A comprehensive list of each High-Level end to end process along with their respective sub-processes are being documented for each of the business process areas (Navy ERP section shown above). Navy ERP FIP BTA

15. A Change to the Reporting Approach • Currently - Data Push – SAP and Legacy Reports • Structured reports delivered at specific times • There are MANY homegrown shadow reporting systems/databases in the commands that combine reports to get required data • ABAP • WARS Extracts • SAP Standard • SAP Business Warehouse • 12,500 users role mapped, ~ 150 log in each week • 5 new classes required • Future – Data Pull – Business Intelligence and “Flexible Analysis” • The use of near real-time (~24 hours) data sets that can be downloaded, • Then filtered, sorted, or formatted for specific use with a variety of Microsoft tools • BusinessObjects / Crystal Reports • Data Conversion • Contract reconciliation • Ad-hoc Reporting • Hooks to legacy data sources 15 15

16. ECP – Engineering Change Proposal Required for all system related changes that modify existing or propose new requirements/functionality within Navy ERP (E.g. Adding fields, new interfaces/reports, process changes relating to new FMR’s etc) All ECPs pass through a tiered level review/approval process commencing with the Process Council Working Group and ending with the NESIB (Navy Enterprise Senior Integration Board) The Process Council Working Groups Functionally based groups (Financial, Acquisition, Program Mgt, Supply Chain, Workforce Mgt) chaired by a Lead Action Officer (LAO) created to provide oversight of business process re-engineering conducted under the Navy ERP program and approval of the resultant new business processes. They are expected to conduct routine reviews, oversights, decisions, and interactions in regards to adjusting Navy “requirements” to fit within the existing methods by Navy ERP. ECPS approved by the Working Groups are Submitted by LAO to Navy ERP Program Office for a ROM (Range of Magnitude) and Presented at the monthly RWIPT meeting for review/approval RWIPT – Requirements Working Integrated Process Team Comprised of SYSCOM Business Office Leads, LAOs, Navy ERP Business Release Manager Prioritize and identify funding options for Navy ERP ECPs to be recommended to the NESIB and the ASN RD&A for approval NESIB – Navy Enterprise Senior Integration Board Comprised of Senior Executives that meet monthly to review the Navy ERP program health RWIPT approved ECPs are presented by either the LAO/SME for final approval ECPs - Overview Requirement discussed w/ Business Office /FMO. SME drafts ECP Process Council Working Group Reviews and Votes Approved ECPS submitted to Navy ERP PO for ROM ECP Presented to R-WIPT for prioritization and identification of funding ECP presented to NESIB by LAO or SME for final approval 16

17. Executive Sponsorship and Governance - Alignment and Continuity of Leadership Data Management – “The Right Data” - Proper Cleansing and Migration Strategy & Execution Project Scope Definition and Maintenance Achieving the Right Balance – Configuration versus Customization Engage End Users – An Integrated, Multi-Discipline Approach – All Project Aspects Think “End-to-End” Strong Expectation Management 1Information from SAP Customer Surveys. Used with permission. Lessons Learned from SAP Defense Customers – Common Challenges Implementing ERP1 17

18. Summary • Navy ERP is the Cornerstone of our FM framework for DON Business Transformation • Standard business processes • System of record for both General Fund and Working Capital Fund financial accounting and funds control • USSGL,SFIS, and BEA compliant • Enables significant reduction in the number of legacy systems requiring support • Enables, but does not guarantee, audit readiness • Navy ERP will provide increased efficiency and improved quality of information to support decision making. • FMO is fully committed to support Navy ERP as the target solution for achieving a vision of improved, integrated, and compliant financial management. • We are working with DFAS, BTA, the DCMO, FMB, the Navy ERP Program Office, and Commands to ensure a successful roll out.

19. FMO Key Points of Contact OASN (FM&C) FMO Financial Systems & Transition Planning Beverly Veit 202-685-6703 Beverly.Veit@navy.mil FMO Support Lead Stephen Baumgartner 571-449-0465 baumgartner_stephen@bah.com Navy ERP Finance Team Lead Nancy Wieck 410-919-1577 Nancy.wieck@navy.mil ERP Command POCs FMO SSP and ONR Lead Sherri Jordan 202-685-6718 sherri.jordan@navy.mil FMO NAVSUP Lead Danny Chae 202-685-6729 danny.chae@navy.mil FMO NAVSEA Lead Jim Depodesta 202-685-6734 jim.depodesta@navy.mil FMO SPAWAR Lead (Acting) Jon Jameson 202-685-6736 Jameson_Jon@bah.com DFAS Lead Carl Inman 216-571-7892 Carl.Inman@dfas.mil 19

20. BACKUP

21. Benefits of ERP 21

22. Benefits of ERP 22

23. Benefits of ERP 23

24. Navy ERP Terminology